New Credit Scoring System Reveals Why Borrowers With High Credit Scores Are Getting Turned Down

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May 04, 2010, 12:02 ET

ASHEVILLE, N.C., May 4 /PRNewswire/ -- A revolutionary new credit scoring system finally reveals the factors that can cause even borrowers with high credit scores to be turned down.

Most people seeking loans these days believe that lenders only look at their credit scores, but in fact, credit scores are just one of the many factors that lenders look at, according to Edward Loew. Loew is a member of a group of former banking and lending industry executives with decades of experience in the industry who joined together to form www.actualcreditworth.com.

Companies who sell credit scores to consumers make billions of dollars a year, but what they don't tell consumers is that even those with very high credit scores can get turned down for loans. There are numerous other factors that lenders look for these days, because of the high rate of people defaulting on loans, Loew explains.

"There are many risk assessment companies out there and further risk modeling such as Vantagescore and Fico score which are used by the three major bureaus. While these are great tools for any lenders, the first thing a lender wants to know is: Am I going to get paid back?" according to Loew.

The actual credit score itself is only about 10 percent of what is considered by the lender, Loew said. That is because there are numerous other factors that affect a borrower's ability to pay, that are not reflected on their credit score.

"It is very possible to have a high credit score and be unemployed or owe child support or live in a home that has critical maintenance required. You can have a credit score of 800 and be looking for a mortgage refinance or second mortgage but your home (the collateral for the loan) needs a new roof," Loew explained. "From the lenders perspective you have no collateral or at the very least you have damaged collateral. You may have an 800 credit score but be borrowing money from your 401k in order to pay the bills. A lender will find this out but there is no indication of this problem on the credit score."

That is why Loew and his team devised a system that allows people to fill out a confidential, extensive questionnaire on their website, with all of the factors that lenders actually do look at when reviewing creditworthiness.

"Our process takes everything into account," Loew explained. "We use credit score as any lender would: as a potential barometer providing good but incomplete information. Our program has so many questions because this is exactly what is going on behind the scenes of every loan approval."

A small sample of the factors that are considered on the ActualCreditworth system are: